The Abbott government has launched a formal review of Australia's 20 per cent renewable energy target, choosing senior business figure and climate change sceptic Dick Warburton to head it.
Environment Minister Greg Hunt and Energy Minister Ian Macfarlane launched the review on Monday afternoon, saying it would focus on the target’s impacts on electricity prices, the renewable energy sector, manufacturing and households.
Among other things, the review will also advise on whether the size of the target ‘‘is still appropriate’’ and consider the scheme’s interaction with other government programs.
The target, established under the Howard government and expanded under Labor, mandates that at least 20 per cent of Australia's electricity comes from renewable energy sources by 2020. But with electricity demand falling in Australia some industry groups complain the target – which mandates 41,000 gigawatt–hours of power be produced from renewables by decade's end – will be overshot by up to 7 per cent.
The renewable energy industry say billions of dollars in investment will be significantly hurt if the target is radically altered. And they say rather than lowering power bills, cutting the target will mean more reliance on increasingly more expensive natural gas.
Both Mr Hunt and Mr Macfarlane emphasised a target review was due in legislation this year. The review was to be carried out by the independent Climate Change Authority, although the government is seeking to disband the body alongside the carbon tax.
An earlier review of the renewables target by the Authority in 2012 found it should not be changed because it would hurt investor confidence in the sector. The Authority also recommended the next review of the target be pushed back to 2016, something the former Labor government failed to change in law.
Mr Macfarlane said the government was mindful of the contribution renewable energy makes to Australia's electricity mix. But he said it had to be put in the context of an oversupply of electricity in Australia.
"Renewable energy has a role to play and it is now time to see where this scheme is going," he said.
Mr Hunt said the government wanted to encourage the development of the renewable energy industry in an environment of stability and long-term security.
"Everything has to be put in the context of the overall costs to the economy. But it is a very productive sector. It's an important contribution [to electricity], and what we are looking to do is provide long-term certainty," Mr Hunt said.
The Abbott government's renewable energy target review will be carried out by a four-person panel headed by former Reserve Bank board member Mr Warburton.
A self-declared climate change sceptic, Mr Waburton told Fairfax Media on Monday that he still maintained those views. But he said he had made a commitment to Prime Minister Tony Abbott that he would carry out the review in a ‘‘completely open fashion’’ and fully canvass all other sides.
‘‘I am not a denier of climate change. But I am sceptical about some of the aspects of global warming, and more particularly what might be causing it, and I don’t resile from any of those comments,’’ Mr Warburton said.
‘‘But I want to be very clear I will be having a very open position on this [the review] and want to make sure we do get all sides of the discussion tabled.’’
In 2011 Mr Warburton co-authored a two part-article in the conservative journal Quadrant called "The Intelligent Voter's Guide to Global Warming", which questioned the findings of mainstream science about how much global warming would be caused by man-made emissions.
Chief executive of the Australian Energy Market Operator Matt Zema, former chief executive of Verve Energy, Shirley In't Veld, and former head of the Australian Bureau of Agricultural & Resource Economics & Sciences, Dr Brian Fisher, will also be on the review team, which is due to report its findings to the Prime Minister's department by mid-year.
The renewable energy sector has been concerned that the target is about to be slashed or even dumped following several negative comments by Prime Minister Tony Abbott about its impact on electricity prices.
Mr Abbott made fresh comments about renewable energy and the target in an interview with Sydney broadcaster Alan Jones on Monday morning. He said the target was having a "not insignificant" impact on power prices, but not as great an impact as the carbon tax.
But Mr Abbott went on to say renewable energy did make a lot of sense.
Mr Jones then responded by saying "it's not affordable," which prompted Mr Abbott to say: "If it goes too far it becomes very, very costly."
"It is one thing to have solar hot water systems and what have you but it's another thing to expect that we can deliver base load power with renewables. That is why all of these renewable systems need conventional backup."
Greens leader Christine Milne said the review was a thinly veiled attack on solar and wind energy in favour of coal.
‘‘Climate denier Dick Warburton is one of the nation’s chief opponents to carbon pricing and effective global warming policy,’’ she said.
Climate Institute chief executive, John Connor, said contrary to many claims the cost of the renewable energy target was cheap – about $1 a week for the average household – and if changed the emissions intensive coal-fired generators would be a major beneficiary.
Power giant Origin Energy has previously called for the target to be delayed by five years to 2025, but increased to 25 per cent.
Australian Industry Group chief executive Innes Willox said circumstances had changed markedly since the current target was set. In particular projections of electricity demand had fallen so that the legislated target was now well in excess of the original 20 per cent goal.
“The key challenge of the review will be to find the balance between the direct costs for energy users of the [target] and its impact to suppress wholesale electricity prices,’’ he said.
“We particularly welcome the inquiry as an opportunity to tease out the various impacts of the [target] on electricity prices and to examine closely how changing the target might be expected to flow through to changes in electricity prices for households and business users.’’